First Person Shooter...

Greetings good citizen…

I’m sure many of you are ‘anticipating’ how I will address the most recent wave of violence erupting across our crumbling civilization...

And I’ll repeat what I’ve been screaming about all along…although you’ll now see certain ‘between the lines’ and ‘assumed’ universals (things everybody knows but few acknowledge) brought to the fore.

First let’s look at the ‘culture of violence’ we are expected to shrug off like it doesn’t effect us.

How many of you are connecting yesterday’s gunning down of Connecticut school children with drones killing civilians halfway around the planet (who are ‘posthumously’ labeled ‘terrorists’ by the corporate owned media to justify this ‘murder’?)

But a little closer to home we need look no further than the prevalence of ‘first person shooter’ video games that kids like Mr. Lanza grew up playing.

What doe this do to a child’s Id?

Sure as hell ‘desensitizes’ them to the idea of shooting someone to death…doesn’t it.

And what was one of the headlines on my homepage news feed this morning? How violent video games are the ‘top seller’ at retailers this Christmas.

How much of this is caused by Halo, Call of Duty or Assassin’s creed?

More succinctly, what drove this anti-social loner to first KILL HIS OWN MOTHER and THEN take up arms and drive down to the local elementary school (as opposed to a shopping mall) and open fire?

Do you think we should start mandatory testing (for psychopathy) now or should we wait until a few more thousand are murdered?

Will the next psycho cut to the chase and blow the whole school up?

Hell, we’ve already let the ‘high functioning’ psychopaths destroy the global economy so what’s the senseless murder of a few dozen innocents matter?

When there’s a ‘free for all’ out in the streets it will be too late. The bonds that prevent us from killing one another on sight are wearing perilously thin.

How many times do I need to repeat this before SOMETHING (like TESTING) is done?

Or would we discover that drawing our children from the bottom of a test tube (another crisis that the media purposefully ignores) is adding to what Mother Nature might naturally screen out? (Like the sudden surge in nut allergies and the insane jump in asthma rates?)

But no, we couldn’t possible be talking about the same thing…except we are now coming into the ‘maturation’ of the first generation of ‘test tube’ babies.

And with it nobody wants to connect the alarming rise in the rates of ADD and other ‘socialization’ problems that have been ignored…because the source of every one of these afflictions is…rabid capitalism (profits before people!)

Why are females ‘waiting’ so long to start families? Because they want to establish their careers first…so they go to school and work during their prime childbearing years, leaving most of them barren by the time they make their heap (or say yes to the guy who has been chasing them since they were in High School.)

No money, no family!

What do you suppose our young shooter saw that the fucking asshole corporate owned media is doing its damnedest to ignore?

He saw a system that didn’t have a place for him and determined that no matter how he sliced it, he had nothing to lose!

He killed his mother for bringing him here in the first place and he killed those kids as a ‘favor’ to them. While he’s not here to ask I would bet he believed he was doing them a ‘kindness’ (albeit a left-handed one.)

Which also shines a spotlight on just what kind of monsters we’re dealing with here (and I mean that figuratively because we are factually doing nothing about this.)

So, I have pissed off my female readers and all of the parents in my audience…but like I have said repeatedly, I’m not here to be ‘popular’, nor is it my purpose to tell you what to think.

My ‘mission’ is to provide you with things to think about by offering up a different perspective than the corporate owned media serves up.

Yes, they lie to you religiously and you don’t hate them…(you may catch yourself muttering ‘bullshit’ under your breath a lot but you don’t begrudge them doing you the disservice of lying to you in order to protect the oligarchs.)

Yup, nobody questions that the stacked deck has become obvious just as nobody questions the futility of living from lottery to lottery, hoping you can set yourself free from the debt trap you were born into.

I’ll ask (rhetorically) if our shooter was ‘wrong’ in his assessment of the future that led him to act so…

Rationality is a very fragile thing, what seems senseless to you may appear perfectly logical to someone else.

If we back up a few steps, the society that bred this killer is NOT blameless…

I say the ‘root’ of this disease lies in a predatory social structure that leaves the individual on their own to deal with problems that shouldn’t exist in the first place.

We would be very lucky indeed if the Mayans were right and this predatory mess we are snared in ‘died’ on 12/21/12…

So what do you say good citizen, are you feeling lucky?

Thanks for letting me inside your head,

Gegner

Rinse & Repeat

Greetings good citizen,

For most of us life is centered on doing what we need to do to keep the wolves from the door. We slave away at unrewarding jobs (even good jobs don’t ‘reward’ YOU…) never giving much thought to the NITWITS in charge!

Which is somewhat off base…we think about the MORONS all of the time…but there’s nothing we can do about the incompetents at the top.

We don’t ‘vote’ for them and, push come to shove, we don’t have the luxury of choosing not to work for them, the job market has been tight (and getting tighter) for years.

It’s generally accepted we ALL work for idiots and that we’re also led by incompetents. While we may get to ‘vote’ for who leads us we are powerless to ‘fire’ them…(although these same imbeciles can have us killed for no reason whatsoever!)

But let us not get distracted by the subtleties involved.

Again, I am pointing to something YOU aren’t supposed to be thinking about…

Leadership that is responsive to YOUR needs…(so why would your government need the power to KILL you without reason? Could we be back at the original issue of ‘whose government is it anyway?’)

(Not that it’s going to be an issue much longer.)

Well, here’s something for you to ponder while your figuring out whether you want pork or chicken in the ‘barf bag’ tonight.

This whole ‘investor charade’ only works in the ‘one size fits all’ mode!

Thus, starting last year, Goldman began to offer an N-11 Equity fund to complement its BRIC fund. Ms. Koch said both funds could have roles in retail investors’ portfolios, either as someone’s full emerging-markets allocation or as an add-on, particularly for a person invested only in an emerging-markets index fund. That’s because the leading emerging-markets index, by MSCI, excludes Nigeria, Vietnam and Bangladesh — three countries that Goldman counts as promising.

“We’re saying that the default is suboptimal,” she said. “You have to ask which countries are really going to drive growth.”

BUT William S. Rocco, an analyst for Morningstar, advised caution when considering a BRIC fund or any narrowly targeted emerging-market offering. Investors who haven’t invested in emerging markets before should consider a broader offering, he said. “Generally, at Morningstar, we don’t like the idea of artificially limiting a manager’s choices,” he said.

And if they already own foreign or emerging-markets funds, they probably have exposure to the BRICs and several other emerging and frontier countries, he said. “Why would you want so much Brazil and China?” he asked. “You’re really doubling down.”

DO you understand what you’re seeing here good citizen?

This is taking the ‘Western Lifestyle and ‘making it fit’ around the globe.

And guess what good citizen, in order to pull this off the idiot capitalists’ need one and a half more Earth’s to exploit!

But that doesn’t stop them or even slow them down.

A lack of resources only means higher prices for those who can afford such things.

Remember money’s ‘one useful purpose’, that of ‘regulator’.

You don’t think about it that way but believe you me, those who can help themselves to as much as they want think about it precisely like that…because NOTHING is beyond THEIR reach!

Um, just to verify something that has been troubling you, the impression that you’re trapped on a ‘runaway train’…it’s true…and there is NO SAFE EXIT!

Why are YOU being ‘priced out’ of the market for goods your parents could easily afford? Because they are being sold to hundred of millions more customers than they were back in your parents day…because ALL ECONOMIES ARE LOCAL!

And a sidebar to the priced out argument is we no longer make those things here…which has a huge bearing on their ‘affordability’.

But as I pointed out in yesterday’s post, we will soon be unable to afford the ‘Western Lifestyle’ at ANY price!

Energy scarcity is a real ‘game changer’.

How frightening is it that if we don’t carefully manage the transition to energy scarcity that we could quickly find ourselves in a ‘kill on sight’ situation?

Which is to point out that those of you playing the ‘don’t rock the boat card’ are in for a real ‘hard landing’ when they pop the ‘energy surprise’ out of the box…(likely this winter.)

Which brings us to another issue.

We are far from ‘out’…BUT there isn’t enough to keep things rolling at ‘the current rate of consumption.’…the ONLY way to stretch what remains is to KILL OFF the ‘surplus population.’

Not that is matters to the rest of us but the only way to do this AND maintain the ‘status quo’ is to follow the above recipe…

We can quite easily convert to an energy scarce economy…but we’d need to ‘re-shuffle the deck’ considerably. (Starting with the Human Anti-Exploitation law! When viewed in this context, it’s importance becomes apparent.)

Um, don’t look now but the fucking >One Percent has drawn a bulls-eye on the back of ALL Western (industrialized) nations.

Our masters think we have been ‘too free’ and aren’t ‘sufficiently disciplined’ to meet the challenges of an energy scarce world. Spoiled as we all are by unions and coddled by frivolous civil protections.

So if you’ve been wondering why the West is in decline…it isn’t the regular people who have gone ‘decadent’…it’s the >One Percent who believes we will be ‘unmanageable’.

So your desire to ‘hold on to what you’ve got’ will prove futile…change is coming whether you fight or you lay down and die.

Thanks for letting me inside your head,

Gegner

Dogs and Foxes

Greetings good citizen,

Today’s Business headlines remind me of the old joke, ‘What’s the difference between a Dog and a Fox?’

The answer is another famous quip…Budweiser doesn’t brew enough to drink her pretty…by the time I get that drunk I pass out.

Which is to refer us to another tired cliché…the one about putting lipstick on a pig.

Let’s get parsing, shall we?

HSBC to Apologize at Senate Hearing
By MARK SCOTT and NEIL GOUGH 49 minutes ago

HSBC, Europe’s largest bank, will apologize to American authorities next week for failing to prevent potential money laundering activities from taking place at the bank, according to an internal memo.

Remorse somehow never quite goes far enough…and we can all appreciate that what they’re ‘sorry’ about is not what they did, but getting caught doing it.

So how much you want to bet the ‘usual outcome’ will be the end result?

If ANYTHING happens at all it will be a small fine and a slap on the wrist (with a wet noodle.)

Sidebar, I was bringing in the mail yesterday and I noticed the postage stamps now read ‘freedom’ or ‘justice’ with the added subtext ‘forever’ underneath and I couldn’t help but wonder if the stamps were foreign…

Euro Watch
Glimmers of Hope Fail to Lift European Markets
By STEPHEN CASTLE 9:27 AM ET

European industrial production rebounded unexpectedly and Italy's short-term borrowing costs dropped, but the mood remained fragile.

Spain’s Leader Plans New Austerity Steps as Miners Clash With Police
Italy’s Leader Calls Economic Efforts a ‘Very Tough War’
Weak U.S. and European Economies Weigh on Asia

Industrial production ‘rebounded unexpectedly’…once again we are faced with the question of ‘degrees’ or as they say ‘define rebound’?

Usually this ‘variation’ in the data turns out to be a math error but if the error is favorable they will run with it to see if they can’t improve ‘market psychology’.

I will once again remind you that facts don’t matter, it’s all about ‘perception’.

It’s the old ‘spoonful of sugar’ routine minus the Mary Poppins song and dance bit. As you will note, they’re ‘selling’ austerity over there.

Wall Street Opens Lower
By THE ASSOCIATED PRESS 36 minutes ago

Shares fell despite better-than-expected data on unemployment claims.

U.S. Jobless Claims Plunge to Lowest in 4 Years 9:30 AM ET

If you keep making right turns you will eventually return to your original course…and yes good citizen, it was the fourth consecutive ‘down day’ for the NYSE that made the question of the difference between a dog and a fox pop into my head.

And the rest sort of followed that initial mental hiccup.

We all know that falling claims have nothing to do with the actual unemployment climate.

There are no jobs nor will there be any for as long as the global race to the bottom, driven by ‘more with less’, ends.

Fear of Year-End Fiscal Stalemate May Be Having Effect Now
By REBECCA BERG

Economists say uncertainty over tax increases and spending cuts set to take effect at the end of 2012 could be cutting into economic growth already.

Graphic: Measuring Uncertainty Over U.S. Policy

We all KNOW what’s going to happen after November and we’re ‘bracing for impact’.

After the elections oil/energy prices are going to climb through the roof and stay there. It’s happened every time right after the run up to the elections end.

How unfortunate is it that we elect our leaders just before Winter sets in?

The Fed’s chairman, Ben S. Bernanke, has said that additional action should not be taken lightly.
Fed Is Torn on Tipping Point for Action
By BINYAMIN APPELBAUM

An account of the June policy meeting shows concern over slow growth was weighed against uncertainty about the consequences of new intervention.

How many ways can you say, ‘We don’t have any ammo left?’

The question is how long can they keep up the charade and the answer is…not much longer.

U.S. Trade Deficit Declines in May
Funny how if you don’t sell the last load of imported bullshit you don’t need to import as much next time…and the ‘Trade deficit’ magically declines as a result! (fucktards)

Scott Zaremba, owner of Phillips 66 in Lawrence, Kan., which has begun offering regular cars fuel that is 15 percent ethanol.

In Kansas, Stronger Mix of Ethanol
By MATTHEW L. WALD

Ethanol makers want to offer a blend of fuel that is 15 percent ethanol rather than 10 percent. At a Phillips 66 station in Lawrence, Kan., E15 is catching on.

Perhaps more pointedly is how none of the farmers in Kansas own a fucking lawnmower (that ethanol is destroying!)

Great for corn farmers receiving huge subsidies…sucks for everyone else…besides the disturbing implications of stepping up the production of food into fuel, definitely not ‘sustainable’…not that the fucking capitalist cares.

So will tomorrow answer the question of ‘what’s the difference between a dog and a fox? When the stock market inexplicably rises…for no apparent reason except ripping the rest of us off?

When stocks appreciate for no apparent reason YOU lose. What you’re seeing is the ‘depreciation’ of your purchasing power. While the already wealthy unjustly enrich themselves further.

If we don’t put a stop to this blatant robbery we will all find ourselves well and truly.

Thanks for letting me inside your head,

Gegner

Fortress

Greetings good citizen,

Um, Markets around the globe are bleeding from the eye-sockets yet again as the perpetual game of ‘idiot’s delight’ continues unabated.

Run ‘em up then sell ‘em off. You know somebody’s losing their shirt but again it’s not the ‘paper rich’.

They aren't losing any sleep/money over the ‘controlled gyrations’ of the stock markets.

(A tool mainly used to whip politicians with.)

Irrationally, the markets tank and Joe Six-pack gets pissed at the local pols (thanks to his being indoctrinated by the conservo-whackos!)

Either way, the destruction of our feeble civilization proceeds apace.

More in keeping with recent posts we have this article from Alternet that confirms something we already knew, that Willy Jeff Clinton was a DINO…

The Republican and Democratic Party conventions later this summer will probably witness the mass arrest of many American citizens assembling to exercise their First Amendment rights. Mass arrests accompanied the Republican conventions held in New York in 2004, when 900 people were busted, and in St. Paul in 2008 when 300 were detained, including 30 journalists.

A political convention is designated a National Special Security Event (NSSE), a category of state security originally established by President Clinton through a classified 1998 directive. NSSEs also include the Olympics, the Super Bowl and gatherings of world leaders like the G20 or NATO summits. An event receiving a NSSE designation gives federal and local law enforcement wide discretion, often leading them to treat protesters as potential terrorists and threats to national security.

This attitude was visible in the recent NATO summit held in Chicago at which approximately 70 people were busted over two days, including three for “terrorism,” allegedly planning to fire bomb the Obama campaign headquarters.

These National Special Security Events will soon be declared by local politicians seeking to protect their own sorry ass from the fall-out of their superior’s reckless decision-making.

Now let’s take a moment and look at ‘who’ will have ‘overtime’ dangled under their greedy little noses to work these decidedly dangerous ‘details’.

Yup, we have yet another post centering on the guys in the (increasingly) Black Uniforms.

What is the likely outcome of this?

They (the cops) are going to be ordered to show the demonstrators ‘whose boss’…

And the demonstrators are going to get hurt…some of them will incur thousands of dollars worth of legal fees and still others will be getting close up shots of the assholes who are harassing them…

And that’s the ‘fine line’ there, isn’t it? It’s all fun and games until somebody starts keep track.

Now the original purpose of these tapes will be to press criminal charges against police over-stepping their authority…but what judge is going to convict the very people he relies on for his own personal safety?

No…these tapes will be taken and studied by the relatives of the victims…and then vigilante groups will rise up seeking ‘retribution’.

And remember good citizen, THE PEOPLE ARE THE LAW!

Understand what we have here good citizen, we now have laws that deny you justice while protecting the criminals who enforce the denial of your rights.

And what will be the ‘ultimate outcome’ of this Darwinian stand-off?

The families of these officers will shunned, beaten and humiliated and yes maybe even die out of revenge for the sins of the officer.

“Hey, I was just trying to make a few extra bucks!”

Better think long and hard, cameras are EVERYWHERE!

And don’t think nobody has noticed you don’t wear your name badges to these ‘special affairs’.

If your superiors can’t identify you then who knows who is in the blue suit beside you?

Anyone wearing ‘the badge of injustice’ will have to seek refuge behind the walls of a garrison. It will NOT be safe for their families to live among the ‘general population’.

Not that the > One Percent care about this. They long ago separated themselves from the rabble they loathe so much.

So why would anyone ‘take a bullet’ for a decidedly corrupt government as outlined by this article?

And that’s the second question that should have hit you in the eye when you read about this disturbing development. How much more ‘secret legislation’ is hiding out there, waiting to be sprung on an unsuspecting public?

Where were the conservo-whacko watchdogs when this shit was going down?

More disturbing than a barking dog is one who doesn’t bark when he should!

Worse, is the other ‘imponderable’ here. The > One Percent loathe the very people who produce the wealth they consume so copiously so maybe it’s a ‘love-hate’ thing?

Nobody but a cop likes other cops (and even that is extremely ‘conditional’…)

To the extent that ‘like’ only goes so far.

But I digress,

Let us leave today’s offering with the unanswered questions of what else is lying in wait to be sprung on an unsuspecting and worse, unresisting populace and what will be the straw that breaks the camel’s back?

I find it difficult to imagine what further proof anyone would need of a ‘renegade government’ than the authorization of armed force to protect the criminals raping our civilization!

If this isn’t ‘class war’ then your head is so far up your backside as to be beyond removal, even by surgical means.

Thanks for letting me inside your head, (despite that disturbing final mental image!)

Gegner

PS. Officers, remember your oath, protect the people, not the criminals!

The Diving Dollar...

Greetings good citizen,

The Dow not only dropped below the 10,000 mark in early trading but it rallied even higher just before the close…and we can only wonder if this is being done for the ‘psychological benefit’ of tricking the ignorant into thinking the economy is on the mend…somehow.

Naturally, today’s er, ‘surge’ is being credited o Goldman Sachs and Citigroup…who actually lost money again but, like last time, managed to ‘beat expectations’…whatever the fuck that means in the real world?

So if you’re riding that ‘we’re saved’ high, you can just stop reading right here…

tonight’s offering contains more reality than you can handle, brought to you by that master of doom & gloom, Jesse!

[Hat tip: Jesse’s crossroads café ]

Sumitomo Forecasts Dollar to 50 Yen, End of Dollar as Reserve Currency

"We can no longer stop the big wave of dollar weakness," said Daisuke Uno at Sumitomo.

Nothing goes straight up or straight down. Look for corrections in the precious metals and the dollar, and the strengthening currencies such as the Aussie dollar, which seems headed to US dollar parity. However, the macro trend is apparent.

We get a chuckle over this dollar weakness when free market people like Steve Forbes come out and look for market intervention to stop it. The market is taking the dollar where it should be, where it needs to go. If only countries with obvious pegs and ongoing manipulation to support export mercantilism were also to allow their currencies to float more freely. It is going to kill off global trade. It is the great failure of the WTO and US trade policy to have allowed pegs and overt currency manipulation policies which are de facto tariffs and subsidies on trade.

A 'crash' in the US stock market, should one occur, will temporarily jar nearly everything. More likely is a long slow slide as in the second phase of the Great Depression, from 1931 to 1933.

Monetary inflation can make the nominal charts more palatable as it is doing today. The problem is that all Ponzi schemes come to bad ends.

The only way out, the only viable path, is for the US to embrace a serious reform of its markets and its financial system, and to change system that encourages the debilitating corruption of decision-making in Washington, which is under the influence of an army of well-heeled lobbyists. [And Jesse’s not kidding, the only way out IS a total overhaul of the monetary system, right down to the nature of money itself!]

To that extent, the "straight talking" pre-Palin version of John McCain had it right. Little serious reform can be done until campaign finance and influence peddling in Washington is addressed. McCain saw the danger of this conflict of interest in his own career as part of the Keating Five, and his own party and the rise of the neo-con statism and its assault on republican ideals. [Must be another one of those ‘best kept secrets of conservatism’ if the Rethugs actually favor reform, nobody knows about it! On the other hand…]

The Democrats have shown themselves to be no better, having gone down the slippery slope of Clinton capitalism, the partnership of special interests and government. Obama failed when he embraced it and now both parties are deep in the mire of corruption.

The banks must be restrained, and the financial system reformed, and balance restored to the economy, before there can be any sustainable recovery.


Bloomberg
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
By Shigeki Nozawa

Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy. [A totally ‘manufactured’ double dip as there was and is no reason for stock prices to be what they are…]

“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.” [The dollar is and has been ‘worthless’ for quite some time, it’s just taking some segments of the economy longer to recognize it than others…]

The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. [Making the dollars you get your ass busted for each and everyday worth that much less.] The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.

The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen. [Does this scare you good citizen? If it doesn’t then you’re not afraid of nothing because this is the stuff collapses are made of…this is how, all of a sudden, you’re paycheck stops cracking your nut!]

“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said. [Sadly, we already know that the US government isn’t beyond lying about the true state of affairs…so it will be up to you to ‘nut up or shut up’…]

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves...

I’ve always admired Jesse’s work and I shouldn’t throw stones because even I sometimes, er, borrow from conservative writers. Hell, from what I’ve observed to date, we all borrow from them on occasion.

Although borrowing from their dispatches is light-years away from actually watching their Kool Aid closely enough to be able to quote it from memory…

Maybe I ran myself through last night when I admitted that gold bugs and conservatives were on the same page because their ideologies are both rooted in fantasy…and most of you think us ‘gloom & doomers’ are a few steps farther down that road than the rabid wingers are…

Something we doomers chalk up to the poor treatment history is given in our schools. ALL of the horrors I point to HAVE ACTUALLY HAPPENED IN THE PAST!!!

History doesn’t necessarily ‘repeat’ itself…but it sure as hell rhymes!

Thanks for letting me inside your head,

Gegner

Crash Flag has been raised!

Greetings good citizen,

I wasn’t really ‘paying attention’ today although I did notice this morning that the Dow had shaved a 115 point gap from hitting ten thousand down to just a 19 point deficit.

And what do you suppose the reason was for this 100 plus point gain on the Dow? What else but ‘outstanding profits’ reported by JP Morgan Chase!

I don’t know about you good citizen but JP Morgan reporting ‘big profits’ doesn’t make me all ‘warm and fuzzy’ about the future of the US economy. If the only ‘enterprise’ in this economy that remains prosperous also happens to be the one that brought the entire [global] economy to the brink of disaster, I fail to see ‘the progress.’

Aren’t we standing in the same place we were when the wheels fell off?

[Hat tip: The Automatic Earth]

The Biggest Bust Will Follow the Biggest Bubble

By Bill Bonner, 10/13/09 London, England

Our ‘Crash Alert’ flag goes back up the pole…October is almost half over. Will we get through the month without a major sell-off?

Dear reader, if you think we know the answer to that, you’ve got us mixed up with someone else. Someone who is crazy.

No one with his wits about him thinks he knows what the stock market is going to do.

Still, here at The Daily Reckoning, we have our hunches. We think it’s time for a major pull back. Frankly, we’ll be disappointed if we don’t get one soon. Because, once again stocks are too expensive.

Too expensive for what? Too expensive for the circumstances.

The Dow rose another 20 points yesterday to a new bounce record. Oil rose to over $73. Gold didn’t budge.

Of course, everyone now knows that the recession is over. NABE interviewed 44 economic forecasters. Four-fifths of them said the recession was over.

But we don’t care what they said. These are the same seers who missed the biggest single event in financial history. There are many banking crises, recessions, panics and defaults in the record books. But none were as great as the one that hit September a year ago. Most economists didn’t see it coming; why should we trust them to tell us when it is going?

Besides they’ve got the whole thing wrong. It isn’t a recession; it’s a depression. There is no recovery from a depression; instead, the economy has to re-invent itself in another form. Things aren’t going ‘back to normal,’ in other words. Because the period leading up to the crisis was not ‘normal;’ it was a bubble. After a bubble explodes, you have a lot of debris to clean up. The bigger the bubble, the more damage it does when it blows up.

“The force of a correction is equal and opposite to the deception that preceded it.”

You’ve heard our dictum before. In fact, you’ve heard our explanations for all these points before.

We just lived through the biggest bubble in history. Get ready for the biggest bust. Not just two years of falling stock prices and news-making bailouts. Not just 10% unemployment. Not just 100 bank failures and 30% off housing prices.

Noooo… We’re talking about a worthy correction…a real correction…a noble and distinguished correction…a correction that can hold its head up in public.

This is a correction that will take many years…one that will knock housing prices down for at least five years…and stock prices down to the point where people no longer want to buy them. It’s a correction that goes deep enough and continues long enough to do its work – wiping out the bad investments and mistakes of the Bubble Era, while allowing the survivors to pay down their debts and build up their savings.[Sadly, this outlook is overly optimistic…given that civilization is only 9 meals deep…]

Now, here’s a confusing little item. Yesterday’s news tells us that consumer spending as a percentage of the entire economy has edged up to 71%. Now wait just one cotton-pickin’ minute. How could consumer spending be going up?

Hold on, cupcake. It’s not going up. It’s going down. It’s just that the other components of the economy are going down even more.

In the second quarter consumers spent $195 billion less than they did the year before – a 1.9% drop. In the 20 years before that, consumer spending increased at an average rate of 3.3%. So, you do the math… that’s an about-face of more than 5% of GDP – a loss to the economy of about $700 billion!

Consumer credit is going down (we reported the figures earlier in the week)…unemployment is going up…consumer spending is going down…

…those are not the circumstances in which stocks sell for 27 times earnings…and move higher. Those are the circumstances in which stocks crash.

David Rosenberg:

“By some measures, the S&P 500 is already trading at valuation levels that would ordinarily be consistent with an economic expansion that is five-years old as opposed to a recovery that, at best, is in its infancy stages.

“On an operating (‘scrubbed’) basis, the trailing P/E multiple on the S&P 500 has expanded a massive 10 points from the March lows, to stand at 27.6x. Historically, when the economy is taking the turn away from contraction towards expansion, which indeed was the case in Q3, the trailing P/E multiple is 15x or half what it is… While we will not belabor the point, when all the write-downs are included, the trailing P/E on ‘reported’ earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble.”

So, here goes…yes…today, we are officially running our “Crash Alert” flag up the pole here at the London headquarters of The Daily Reckoning. Cross Blackfriars Bridge and you might see if flapping in the wind, between the two huge gold balls on the roof.

Our Crash Alert flag is out because stocks have become too expensive…and because this bounce should be reaching its apogee by now. Already, central banks are talking about cutting back on their efforts to sustain the bounce with easy credit. Australia led the way last week with a rate hike.

It is also becoming clearer and clearer that the feds’ efforts aren’t really working. They can give money to their friends in the banking industry. They can give money to speculators who then make bets on the stock market, among other things. They can bailout major companies. But they can’t really get much money into the real economy.

Au contraire; they take money OUT of the real economy. The feds will absorb $700 billion of private savings this year alone…to finance their deficit. They expect $1 trillion deficits at least for another 10 years. That won’t leave much money for the private sector.

Naturally, Washington, DC, is doing well. While unemployment is near 10% in the rest of the nation, it’s only about 6% in the Washington area. [And it less than that in the land where the Credit Card companies hold sway…go figure?]

But let’s face it… What’s good for Washington is bad for the rest of the nation. The feds have used this correction to increase their power…and add to their wealth. The average federal employee now earns twice as much as his counterpart in the private sector – if the fellow in the private sector has a job at all. [Bizarrely, how can consumer spending be going up when the big news in this morning’s NY Times was about paychecks being cut in half?]

A news item tells us that TARP recipients spent $114 million lobbying for their bailout money – most of it going into Washington, of course.

And the feds now own major stakes in what used to be the private sector – insurance, automobiles, and banking industries. [nor should anyone be shocked to learn just who’s reckless practices sent them running for the ‘protection’ of the taxpayer, never mind who, precisely, offered that protection?]

Er, ‘snip’, what comes next isn’t particularly ‘relevant’…if you want to read radical right wingers bloviating (as they are wont to do) you need only follow the link for the rest of the article…

Which leaves us in an interesting spot…why the hell am I using ‘conservative’ material? Truth be told good citizen, there isn’t much difference between a conservative and a ‘gold bug’. They both believe in fantasies…which is another way of saying they don’t enjoy a particularly firm grip on reality.

But every once in a while they do manage to make a valid point! And today’s valid point was it is not so much that consumer spending is going up as it is the value of the dollar is tanking big-time!

What you’re really seeing (That the clueless pundits are putting a positive spin on) is that you’re PAYING MORE for the same amount of junk you normally buy, making it appear like consumer demand is rising!

Worse, considering most of us have ‘cut back’ on what we buy, the ‘spike’ they’re pointing at really represents, er, runaway inflation! They’re ‘price increases’ tacked on solely to make it ‘look like’ people are spending money! (While employers are actually slashing paychecks!) Talk about a ‘fuckaree!]

So it doesn’t matter if you’re happy or upset that the Dow is back over 10,000…even if there isn’t a good reason for it to be there. What should make most of us ‘happy’ is the fact that none of us bought this stock market and if people were smart, they’d be cashing out their 401k’s while the cashing was good! I mean tomorrow.

The conservative ‘gold nuts’ are right to run up their ‘crash flag’. The trick is to get out now, before it crashes!

Gegner is not an investment advisor and nothing here should be construed as ‘investment advice…’ but if you have half a brain, get the fuck out now!

Thanks for letting me inside your head,

Gegner

More of the same...

Greetings good citizen,

This weekend the employment picture has filled the usual weekend ‘news void’, perhaps the most disturbing aspect of this not particularly unusual development is that the reports are almost universally ‘bad’. Regardless of what side of the fence you’re riding as far as the recovery is concerned, the latest unemployment data spells doom for anything even remotely resembling a recovery.

I chose the intro to Ilargi’s 10/3 piece because of his laser-like focus on the topic at hand. If you wish to read the entire text of tonight’s offering you can find it by following the link…

October 3 2009: Just the naked eye

Ilargi: I’m starting to wonder how many people there are left who actually believe all the talk about the economic recovery we're supposed to have entered. You know, the one proclaimed by governments, central bankers, institutions such as the IMF and the entire flock of parrots and parakeets that call themselves media and are all set 24/7 to repeat their every word, chirping, tweeting and twittering as they go along. And I'm afraid there still are far too many such believers left. They have a great shot at losing a lot of money in the next few months.

I also wonder how many people have gotten real nervous by now. Who've asked themselves what I asked a while back: what are the odds that the stock markets will keep on rising? And on what grounds would they do so? Surely many must have realized by now that perhaps that talk about a recovery is just that, talk. The strength of their belief may depend, to a large degree, on the job market. After all, it should be obvious that "jobless recovery" is a term used exclusively by people who do have jobs, and often cushy ones.

I like this little graph, because it provides a very nice picture of the effect of the hundreds of billions in taxpayer money spent by the American government on the job market. From about May through September the country has bought itself a slight decrease in the rate of job losses. Still, the unemployment rate has gone up despite all the cash and credit so generously supplied by you, the taxpayer. And it by no means tells the entire story; indeed, it may well relate only the rosiest parts available.

Now other, less positive, parts are slowly being revealed that could change and even shatter the image we have of the job market. Here's a few choice bullet points from the reports that came out this week:

* Job losses for September, according to the Bureau of Labor Statistics' U3 calculations, were 263.000.
* This brings the U3 unemployment rate to 9.8%.
* While the U6 rate reached 17%.
* The household survey by the same BLS indicates that employment fell by 785,000.
* An alternate view at the household survey suggest 995,000 fewer people were working in September than in August, while the labor force contracted by 1,262,000 people and the number of people "not in the labor force" rose by 1,516,000.
* More than a half a million people dropped out of the labor force
* 551,000 initial jobless claims were filed.


I don't know about you, but I assure you that I have a hard time seeing the forest through the trees here. It's simply too much of a strange coincidence that the number most trumpeted in the media is always the lowest (U3) one. As soon as you peel away just the first few underlying layers, it becomes clear that this number merely scratches the surface. Most of the 10 million or so people who get counted in U6, but not in U3, are very much unemployed or at least underemployed. The bottom line is that even though the 263,000 number is unrealistically low, likely by a lot, it is the one that government and media stubbornly keep providing, as if the American people, who after all pay the salaries of the BLS employees, are too stupid to have a right to hear the real data.

The latest report does lift the veil a little bit: The Labor Department yesterday admitted it may have underestimated unemployment numbers by as much as 17%, partly because of its faulty birth/death model, which is a useless tool in times like these. The BLS data missed 824,000 lost jobs for the year through last March, with most of the additional job loss occurring in the first quarter of 2009. The potential revision would mean that the economy lost 5.6 million jobs for the period instead of the 4.8 million suggested until now.

[..] the tax records showed the Labor Department’s payrolls figures overestimated payrolls by about 150,000 [..] That implies the estimates missed the mark by about 675,000 in the first quarter of this year [or 225,000 per month] , which currently shows a 2.1 million drop in payrolls.[..]


Calculated Risk added these new numbers to his usual graph which compares job loss percentages in recessions.



Catherine Rampell at Economix provides a similar graph, but using the share of employment:



Awfully bad as it is, the unemployment situation, of course, is but one aspect of an economy that will now grow weaker at a rapid clip.

* US personal bankruptcy filings will exceed 1.4 Million by the end of the year, more than the 1.3 million they reached right before the bankruptcy laws were altered with aim of bringing bankruptcy numbers down.
* Bank card delinquencies hit a record high last month.
* Meredith Whitney says:

o Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan.
o Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.
o [..] more than 32% of U.S. homes are worth less than their mortgages.
o Small businesses primarily fund themselves through credit cards and loans from local lenders. In the past two years, credit-card lines have been cut by over $1.25 trillion. During the same time, 10% of all credit-card accounts have been cancelled.



But the worst part of it all is that deflation is here, and it’s here to stay for a while. In the past few days, we could see heavy hitters like David Rosenberg, Joseph Stiglitz, Janet Tavakoli address deflation in the same way that we at The Automatic Earth have even for longer than the 20 months that this site exists. Ironically, at about the exact same moment when we figured perhaps we were the only ones left (with Mike Shedlock and a few Minyans) to warn of the perils of deflation, it is slowly turning into a mainstream concern. As Tavakoli tells Max Keiser (who still can't believe it), the debts are simply too overwhelming. Not that anyone has seriously attempted to address them.

Rosenberg:

* "We are certainly in a deflationary state," said David Rosenberg, chief economist and strategist with Gluskin Sheff and Associates in Toronto. "Of that, there's no doubt."
* "I think people still have no clue as to just how weak the economy is," Mr. Rosenberg said. Remove the "impressive medication" administered by governments, and most economies are at a virtual standstill. The U.S. economy faces a decade of stagnation, he said.
* [..]"deflation will last until we see the next secular trend of expanding household balance sheets, and that is some time away" Mr. Rosenberg said.



The Federal Reserve decides to stick with another label for the exact same phenomenon.

* "Disinflationary winds are blowing with gale-force effect," [Chicago Fed president] Evans said in a Sept. 9 speech in New York.
* The Fed needs to "keep inflation expectations from slipping to undesirably low levels in order to prevent unwanted disinflation," Vice Chairman Donald Kohn said Sept. 10 in Washington during a speech at the Brookings Institution.



In other words, the government's unemployment data have proven to be unreliable. That in itself is not new, but what is, is the Labor Department's own admission that its stats are flawed. It still hasn't fully opened up by any means, but the cracks are now visible to the naked eye.

The potential for a continued rally in the stock markets is becoming more questionable by the day. If those markets start caving in, as we think they simply must, the hollowness of the recovery proclaimed by governments and media will also lie exposed to naked eye. Whether or not the government and the Federal Reserve have been busy painting lipstick on the markets pig though the past 6 months is no longer even relevant; they will be powerless to do so going forward.

We have the likes of Paul Krugman, Robert Reich and, in the UK, Samuel Brittan, shrieking loudly for more, much more, stimulus. They see the problem coming, that's true, but they fail to see that the US and UK governments opted sometime in 2007-2008 to pour money into their financial systems, and that money cannot be spent a second time.

Many of us remember how a trillion here and a trillion there were doled out with the message that the taxpayer was likely to make a healthy profit on this "investment". Haven't heard that one for a bit. The reality is that between what Washington has thrown into AIG, the Wall Street banks and the Fannie and Freddie and Ginnie family, as bankrupt as it is incestuous, there are only losses.

If and when financials stocks get hammered, banks and insurers -among others- will be forced to execute additional gigantic writedowns and losses. With a 3.6 million official housing inventory, to which we can add a 7 million shadow one, America will have a 25 month supply of unsold homes. If Fannie and Freddie weren't dead yet, that would do it. The losses are yours.

The Krugman clan now wants you to finance a second stimulus. And it will come (albeit under an alternative moniker), but it can bring only more misery for the people. The government will get a little more transparent in a desperate fight for credibility, but it was lost a long time ago. And it's not a specific government, it's the entire system that's morally broke. The entire economic, financial and political systems, all of it and all of them, broke, broker and broken. [understand good citizen that the funds simply don’t exist to ‘bailout’ the global financial system…and if they did, they still shouldn’t do it! This isn’t a problem that can be fixed by throwing money at it, they need to cut to the chase and write off a whole shitload of (mostly toxic) debt…]

I asked above how many people are left that still believe all the talk about that heavily promoted recovery…and though I know they are there, scores of them, that at the same time is something that I'm starting to find hard to believe. Look at the numbers, and never forget that many of them are not even anywhere near as bad as the real ones.

Yes, consider this your storm warning. Batten down the hatches, don’t let your kids wander off, and please, take off those silly rose-colored glasses. From now on in, just the naked eye.

I was sorely tempted to just use the last two paragraphs of this piece but that wouldn’t be particularly fair to Ilargi, who deserves to be heard ‘in context’. Sadly, it was all of the graphs which tempted me to make such an edit but oh well.

What worries most commentators is the ramifications of a second market collapse, especially if it is worse than the first one. Older workers have already seen their retirement plans shrink by 60%, to see them hit again would be disastrous!

It’s a two edged sword, on one edge you have elderly workers unable to exit the workforce while on the other you have young workers unable to enter…we must not let this logjam turn the generations against one another.

But that’s exactly where this is headed, to a second market crash…and most fools haven’t pulled their funds out of the markets!

That said, I am not an investment professional and nothing written here is offered as investment advice.

Thanks for letting me inside your head,

Gegner

Market Psychology

Greetings good citizen,

As ‘green shoots’ fade and the ‘momentum’ built up by one of the most bizarre stock market rallies in history fades into the distance, people will indeed ask ‘what happened?’

Aren’t we on the verge of a global economic recovery? Didn’t Ben Bernanke ‘save’ us from a second Great Depression?

We are inching ever closer to the ‘moment of truth’, where all of the excitement of the market rally will be put to the test and people will start to wonder where all of this ‘prosperity’ is hiding.

And trust me, good citizen, it’s hiding pretty darn well. It’s hiding in the numbered, off-shore accounts of tax havens around the world.

I want to state up front that it is not my intention to kick anyone in the shins here. It is my purpose to offer an alternate point of view to tonight’s offering

Economic View
An Echo Chamber of Boom and Bust

By ROBERT J. SHILLER
Published: August 29, 2009

THE global signs of a recovery in economic confidence seem puzzling.

It is a large and diverse world, after all, so why should confidence have rebounded so quickly in so many places? Government stimulus and bailout packages have generally not been big enough to have such a profound effect. [Good questions all, BUT we’re actually talking a pretty small number of big players here. The confidence expressed by a few isn’t as broadly shared as Mr. Schiller would have you believe.]

What happened? Economic analysts often turn to indicators like employment, housing starts or retail sales as causes of a recovery, when in fact they are merely symptoms. For a fuller explanation, look beyond the traditional economic links and think of the world economy as driven by social epidemics, contagion of ideas and huge feedback loops that gradually change world views. These social epidemics can travel as swiftly as swine flu: both spread from person to person and can reach every corner of the world in short order. [Naturally, having the MSM in your pocket goes a long way towards that end.]

As George Akerlof and I argue in our book, “Animal Spirits,” the business cycle is tied to feedback loops involving speculative price movements and other economic activity — and to the talk that these movements incite. A downward movement in stock prices, for example, generates chatter and media response, and reminds people of longstanding pessimistic stories and theories. These stories, newly prominent in their minds, incline them toward gloomy intuitive assessments. As a result, the downward spiral can continue: declining prices cause the stories to spread, causing still more price declines and further reinforcement of the stories.

At some point, of course, the process must end, as when the market falls so low that it becomes enticing, or when new stories emerge. Similarly, an upward movement in stock prices generates its own upward feedback. [Left to our imaginations is whether or not these ‘stories’ are true…]

At first, the feedback explanation may sound too simple, and may suggest that the stock market and its turning points are easy to predict. But because day-to-day noise shrouds these changes, and because the stories change in their retelling and as new evidence emerges, the process is actually very complex.

And even when feedback mechanisms are straightforward, they can produce very strange outcomes, not predictable very far into the future, as the modern mathematics of chaos theory can attest.

Still, when there is a change in the economy, it is worth seeking some sense of what actually happened. We should be able to look back at the recent swings and get some idea, after the fact, of what caused us to change our stories and mind-set.

On the downward path between the stock market peak of Oct. 9, 2007 (when the Dow reached 14,164.53), and its bottom (more than 50 percent lower) on March 9 this year, there was a proliferation of negative stories. [Sadly, most of those stories were true, it’s the ones that have come since that carry rather large question marks…]

In news media accounts and in conversations worldwide, one theme was that something was fundamentally wrong with our economic system, and that it desperately needed to be fixed. The news media seemed full of stories of deceptive accounting and of crony boards of directors — not just because they were news, but also because they answered a public demand for culprits behind the price declines.

These stories led to popular anger, which led business people to become more cautious in their decisions, like those involving hiring and capital expenditures.

Talk of a “crisis of capitalism” was everywhere. In countries around the world, bad guys were found by the news media to personify this narrative. In the United States, the Bernie Madoff story, which broke in December, was a human-interest story that would have been a hit at any time, but it took on supernormal significance as a symbol of an increasingly negative economic perspective. It may be hard to remember now, but these views led to fears that the market might entirely collapse.

I have been collecting survey data since 1989 on public opinion about the stock market; since 2001, the surveys have been conducted under the auspices of the Yale School of Management. We compute a “Crash Confidence Index,” which measures people’s confidence that there will not be a stock market crash like that of Oct. 28, 1929, or Oct. 19, 1987. The index reached its all-time high in 2006, as the market was still soaring. It reached its low at the beginning of this year.

Recently, the Crash Confidence Index has been on an upswing again. Stories about market crashes are less frequent and are being crowded out by a wide variety of other, more normal narratives. The markets have repeatedly been shrugging off bad news because people have a different mind-set. [Understand, once again, we’re only talking a handful of people here.]

The popularity of the term “green shoots” shows the kind of social epidemic underlying our changing thinking. The phrase was propelled in Britain by Shriti Vadera, the business minister, in January, and mutated into a more contagious form after Ben Bernanke, the Federal Reserve chairman, used it on “60 Minutes” on March 15.

The news media didn’t need to change the term for different cultures around the world. With nothing more than a quick translation — brotes verdes, pousses vertes, grüne Sprösslinge, etc. — it is now recognized as a symbol of a revival coming soon. [Sadly, they left out the crucial parts like ‘when and where’…]

All of this suggests that a social epidemic is supporting renewed confidence. This confidence can keep growing by contagion, as a kind of self-fulfilling prophecy, and we may see the markets and the economy recover further.

But in an economy that is still unstable, the stories could also morph into different forms, the price feedback could turn downward and the dynamic could turn ugly again — just as it has in the past.

Understand that Mr. Schiller isn’t ‘predicting’ anything here, he’s merely pointing to ‘market psychology’ and the role it plays among investors.

Which is what prompted me to single this piece out. No amount of ‘psychology’ is capable of creating prosperity where there is none.

Which is not to say there aren’t those who wouldn’t try to convince you otherwise…

Conversely, what YOU, the average citizen, believes about the state of the economy has a direct bearing upon the continued ‘stability’ of society.

Consider, if you will, the continued bleeding of jobs our economy is experiencing and wonder where all of those ‘green shoots’ are?

Thanks for letting me inside your head,

Gegner